SHANGHAI, Mar. 15 (SMM) –About 41% of the 34 Chinese aluminum smelters surveyed by SMM expect aluminum prices to rise this week.
See SMM forecast, please click: LME Aluminum to Underperform SHFE Aluminum Next Week
Those optimists see SHFE 1605 aluminum rising above RMB 11,500/mt and LME aluminum advancing above all moving averages, citing positive factors. First, China’s aluminum output fell 5.8% MoM in February. Aluminum stocks in Shanghai, Wuxi and Guangdong fell last Thursday from a week ago, with the decline three weeks earlier than in the same period last year. Second, spot prices will keep rising as delivery of SHFE 1603 aluminum is nearing, which will push SHFE aluminum up as well. Third, alumina prices rose for four weeks in a row and those in east China have risen to RMB 2,000/mt. Alumina capacity cuts in China have amounted to 4.4 million mt/yr so far this year, including capacity being cut. As such, there is still room for alumina prices to rise, offering cost support to aluminum prices. Fourth, crude oil prices have been performing well recently, also favoring base metals.
Another 41% see SHFE 1605 aluminum stabilizing at RMB 11,300-11,500/mt and LME aluminum stabilizing at USD 1,545-1,580/mt. Technically, SHFE 1605 aluminum is meeting resistance at the 5-day and 10-day moving averages and will face short selling pressure at RMB 11,500/mt mark, but will find support at the 20-day moving average, where longs will enter.
The rest 18% are worried that SHFE 1605 aluminum will fall below RMB 11,300/mt and LME aluminum will fall below the 20-day moving average. LME aluminum failed in many attempts to break through USD 1,600/mt, reflecting a lack of market confidence. Moving averages of LME aluminum are pointing downward, indicating that prices will enter downward track. Market speculative activity will wane after China wraps up NPC & CPPCC on March 16.